Q. I have two AVIVA policies (valued @ £82,000) which are due to mature mid December 2016. AVIVA tell me that both have an investment return of 4.4% per year with an inflation rate of 2.5%. I pay £130 per month premium. I am of the opinion that it will be more economically viable to take the transfer values now as I feel that by investing independently I will receive a far better return in the medium term. Whilst I may lose a certain amount between now and maturity I believe that I will benefit by eliminating further premium payments, the deduction of AVIVA annual costs and expenses (an unknown amount). At the same time I can look to the prospects of a better rate of return (last year @ 9% on other investments). I was told that AVIVA build in the final bonuses into the Transfer value (not sure about this!). Can you calculate what the loss might be on maturity taking in the factors that I have provided? Any comments or views on this? Regards Steve

A: I can help with this but I will need more details and would need to write to Aviva on your behalf to find this out, and to do this I’d need your written authority. I assume this is a pension policy, if so you won’t simply be able to take the £82,000 in cash at least until the recently announced rule changes come into effect next year, but could look at transferring this to something like a SIPP which allows self-investment. However a new SIPP or alternative will still have some charges so you will need to factor this into the equation too. It sounds like you’re in a with-profits fund and therefore returns will be low but as you a looking to take benefits in just over 2 ½ years you need to be aware of the risk by trying for higher returns and I’d need to assess what your capacity for loss is. For example if this is only going to form a relatively small part of your retirement income then your situation would be very different for someone who couldn’t afford to lose any money. Overall I would also need to point out that simply looking at product charges and returns isn’t comparing overall costs as it sounds like you would need advice here which also would need to be costed. Perhaps we could speak on the phone if this is something you’d like to look further into, my details are below, regards, Steve

Steve Weisner Dip PFS, BSc (hons)
Independent Financial Adviser
Radcliffe & Newlands
3rd Floor,
14 Bonhill Street,
London
EC2A 4BX

More questions.

Q. I have £250,000 to invest which I would like an income from what is your advice

A: To give advice on this there are lots of factors which need to be taken into consideration, such as accessibility, attitude to risk, capacity for loss, taxation, age and family situation to name but a few…. MORE

 

Comments

Leave a comment